The People's Pensionhttp://peoplespension.infoshop.org/blogs-mu
Separating fact from superstition about Social Security, social insurance, and mutual aid.Mon, 06 Jun 2016 12:57:36 +0000en-UShourly1https://wordpress.org/?v=4.5.2Obama “expands” the Social Security Conversationhttp://peoplespension.infoshop.org/blogs-mu/2016/06/06/obama-expands-the-social-security-conversation/
http://peoplespension.infoshop.org/blogs-mu/2016/06/06/obama-expands-the-social-security-conversation/#respondMon, 06 Jun 2016 12:53:32 +0000http://peoplespension.infoshop.org/blogs-mu/?p=650President Obama’s statement last week that he supports expanding Social Security was indeed a watershed in the discussion of the program’s future. What happens next is not clear, however, not least because “expand” can mean so many things to people of different political persuasions.

We should be strengthening Social Security,” the president declared during an economic speech in Elkhart Indiana. “Not only do we need to strengthen it, it is time we finally made Social Security more generous and increase the benefits so that today’s retirees and future generations get the dignified retirement that they have earned.” Expansion, he said, should be financed by “asking the wealthiest Americans to contribute a little bit more.”

The location was important: Elkhart was the first city Obama visited after assuming the presidency, in the midst of the worst economic downturn since the Depression. Last week’s speech itself was meant to highlight the progress the economy has made since then. In staking out his new position on Social Security, “Obama is getting on board a movement that’s been brewing within the Democratic party for a while now,” write Nancy Altman and Eric Kingson, co-directors of the advocacy group Social Security Works, noting that a host of prominent figures including this year’s presidential candidates Bernie Sanders and Martin O’Malley and even Hillary Clinton (somewhat guardedly) have endorsed the idea and that Sanders and Elizabeth Warren, among others, have proposed action in Congress to expand benefits and pay for them by extending payroll tax to cover higher incomes.

Obama’s statement was a real watershed event in the long, long Washington struggle over Social Security. For more than 35 years, that discussion has been propelled by voices that want to cut back benefits and compromise their capacity to keep up wth the cost of living, reducing the program to insignificance over time. For a decade, roughly from 1996 to 2005, Washington moved dangerously close to a bipartisan consensus to partially privatize the program—until George W. Bush ventured outside the Washington bubble in an attempt to drum up grassroots support for the idea. His efforts an embarrassing failure, the rest of the capital right and center-right returned to the idea of cutting the program, pure and simple.

Pushback from the progressive wing of the Democrats has kept Social Security intact for decades, but it’s only more recently that lawmakers like Sanders and Warren have concluded that the best defense is a good offense, moving to shift the legislative conversation toward expanding the program. Obama’s statement last week brings their position into the political mainstream.

But let’s not get carried away. Republicans and the Democratic center-right aren’t going to change their positions overnight based on what an outgoing president chose to say in a quasi-valedictory speech. The only thing we know for sure is that the conversation has shifted. That doesn’t change the essential nature of the arguments, only how they are presented.

In one respect, last week’s speech only added to the conflicting signals from a president who has always operated as a centrist dealmaker. Just a few weeks ago, Obama renominated to the Social Security Advisory Board Charles Blahous, a Republican policy hand who has been promoting the downsizing of the program for decades. During his early years in office, Obama repeatedly dangled the Chained CPI as a revised formula for calculating annual Social Security benefits adjustments, in an effort to bring congressional Republicans to the table for a “grand bargain” for reducing federal deficits and indebtedness. Such a move would have significantly whittled down vital benefits for future retirees and many current ones.

If we want to understand what’s really changed, we need to ask ourselves first where Obama’s new support for expanding Social Security came from. CREDO Political Director Murshed Zaheed chalked it up to “relentless grassroots activism” in support for Social Security, and he’s undoubtedly correct. But popular support for the program—in polls, in popular mobilizations ever since the first trial balloons about cutting it under the Carter administration almost 40 years ago—has always been strong. Zaid Jilani, in The Intercept, credited the effect of Sanders’ campaign on the White House and on Hillary Clinton, as did Politico.com:

Democratic presidential front-runner Hillary Clinton’s evolution on the issue could also be traced to Sanders. Clinton initially shied away from the question of expanding the program, issuing only noncommittal statements on the issue. But after being directly challenged on the Social Security program this past February by the Sanders campaign, Clinton tweeted, “As always, I’ll defend it, & I’ll expand it.”

On Bloomberg.com, Sahil Kapur and Mike Dorning took an inside-baseball perspective. “Budget deficits have plunged since 2012, reducing pressure to cut entitlement spending,” they write, while “years of partisan warfare have meanwhile killed appetite in both parties for painful political compromises”—like, for example, sacrificing Social Security to the gods of fiscal responsibility.

All this is a bit myopic. The National Academy of Social Insurance was suggesting ways to expand Social Security as early as 2010, and the Center for Global Policy Solutions, among other groups, was in the discussion a year later. These rumblings had little to do with presidential politics or Washington budget wrangling. Americans’ ability to fund their own retirement, outside the benefits Social Security provides, was clearly eroding. Meanwhile, more and more Americans are becoming, chronologically, elderly—whether or not they are in a position to stop working. The majority of women over 70, for example, rely on Social Security for over half their income. As Kapur and Dorning note,

A 2014 Federal Reserve surveypublished last year found that 42 percent of American workers earning under $40,000 a year, and a quarter earning between $40,000 and $100,000, have no retirement savings.

Also last year, the White House itself released a scathing report on the advice Americans receive about their retirement savings. “An estimated $1.7 trillion of IRA assets are invested in products that generally provide payments that generate conflicts of interest,” the report concluded. “Thus, we estimate the aggregate annual cost of conflicted advice is about $17 billion each year…. A retiree who receives conflicted advice when rolling over a 401(k) balance to an IRA at retirement will lose an estimated 12 percent of the value of his or her savings if drawn down over 30 years.

The old three-legged stool of Social Security, personal savings, and employer-sponsored pensions, while far from perfect, has been reengineered into a stingy and deeply flawed system that leaves Social Security a more crucial defense than ever against old-age poverty.

Fortunately, this shift hasn’t been lost on mainstream media. While most big-media reporting on Social Security itself is still run off the business desk and therefore tends to pump up the arguments for cutting the program (just read the Washington Post’s editorial response to Obama’s speech), other departments have been documenting the disturbing evolution in the situation of the elderly and their families. A steady stream of stories in the New York Timesand the Post have highlighted the plight of families stuck caring for parents who’ve run out of resources, underpaid home health care workers, and women.

Personal finance reporting has become more sensitive to the importance of Social Security in recent years as well, proffering advice on when and how older workers should apply for benefits if they want to maximize their income from the program. Even Larry Kotlikoff, an economist who has spent decades scaring the public into believing Social Security is bankrupting the nation via a model he calls “generational accounting,” has remade himself as a PBS (no less) contributor, explaining what are the best claiming strategies. (He’s changed none of his thinking on the program’s fiscal prospects, however.)

All of which highlights a basic point that occurred to many observers as early as the Reagan administration: that the window of opportunity for cutting Social Security was destined to be a short one, bounded by the baby boomers’ working years. Once that 70 million-plus generation started claiming benefits, the chances of persuading Americans—not just retirees but their already overburdoned familes—to accept a drastically pared-down program would dwindle.

This accounts for the slightly spluttery, exasperated tone of much of mainstream Washington’s response to Obama’s speech: consternation that “counterproductive” ideas like across-the-board improvements to Social Security are gaining a toehold, in the words of the austerity-minded Committee for a Responsible Federal Budget.

Cleverer minds in the anti-Social Security camp, however, understand that if the conversation is changing, they must recast their ideas to stay in it. What does it mean to make Social Security “more generous”? to “increase benefits”? Andrew Biggs of the American Enterprise Institute has proposed a plan that would gradually replace Social Security, and its progressive benefits system, with a universal, flat-rate benefit set at the poverty threshold, indexed to increase with the cost of living. Access to 401(k) accounts would be expanded, and workers over 62 would not have to pay payroll tax. Biggs would also boost benefits for current retirees with benefits below the poverty line.

There’s plenty not to like about this plan, but the most important objection is that it would turn a universal social insurance program into a poverty program—exactly the kind Republicans and center-right Democrats have enjoyed eviscerating in recent decades. Yet, it would certainly be possible, by some measures, to describe it as making Social Security “more generous”—for some recipients, at least—and better “targeted” at those who need it the most.

Doubtless, this is not what Obama had in mind in Elkhart last week. And it’s possible that his speech really will strengthen the hand of Sanders, Warren, and the many other voices hoping to achieve a more generous Social Security system—one that can better serve today’s workforce. Throughout his career, however, Obama has not been a policy innovator: rather, and often to his misfortune, he attempts to direct the conversation, then let the leadership fight over the details. Different sides of the Washington establishment will read this words in different ways, and relay their spin back out to the public. It’s quite possible that, except for some of the grumpier austerity advocates, “everybody” in town will be talking about the best way to “expand” Social Security in the coming weeks and months. If you don’t want to get stung, however, be sure to take a careful, close-up look.

]]>http://peoplespension.infoshop.org/blogs-mu/2016/06/06/obama-expands-the-social-security-conversation/feed/0The realism of Berniecarehttp://peoplespension.infoshop.org/blogs-mu/2016/01/28/the-realism-of-berniecare/
http://peoplespension.infoshop.org/blogs-mu/2016/01/28/the-realism-of-berniecare/#respondThu, 28 Jan 2016 22:06:21 +0000http://peoplespension.infoshop.org/blogs-mu/?p=638Ever since Bernie Sanders released details of his single-payer health care proposal recently, critics right and center have been on the attack against his “revolutionary, unaffordable and unachievable” scheme. In fact, for those who truly want to achieve universal, affordable health care, Sanders’ path is the only realistic way forward.

“Be reasonable: demand the impossible.” So said revolutionary Ché Guevara. [NOTE: I’ve since been corrected; the origin of this slogan was not Ché, but a graffiti encountered during the 1968 Paris uprising. Check it out here.] It’s a lesson much of the Democratic Party establishment needs to relearn this election year.

For instance, Henry Aaron of the Brookings Institution. One of the country’s top experts on social insurance and health care financing and a smart political observer to boot, Aaron ran a piece in Newsweek recently that took apart presidential candidate Bernie Sanders’s health care reform plan as being “radical in a way that no legislation has ever been in the United States,” vague on details, and technically unfeasible. It’s “a health reform idea that was, is, and will remain a dream,” Aaron writes. “Single-payer health reform is a dream because, as the old joke goes, ‘you can’t get there from here.’”

Above all, critics argue that Berniecare would undermine the one genuine domestic-policy achievement of the Obama years: the Affordable Care Act, which made it through Congress, however messily and imperfectly, in 2010, and which the White House has been fighting to implement, over fanatical Republican opposition, ever since. How could a loyal Democrat—or even a sympathetic Independent like the senator from Vermont—want to do such a thing?

Sanders’ critics are forgetting a few things. First, Obamacare remains highly unpopular, notwithstanding the fact that it contains multiple very popular elements. If a Republican is elected president in November, then unless the Democrats make big gains in the Senate, it’s possible that the GOP next year could repeal the whole edifice (while retaining a few popular features, of course.) The ACA has not stopped the slide toward high-deductible insurance plans that’s squeezing working families. And, for reasons not entirely the Administration’s fault, it’s a clunky vehicle that urgently needs to be improved if it’s going to survive.

So why shouldn’t we consider moving toward a single-payer system, such as Sanders advocates? The main reason, according to Aaron, is that it’s not “incremental.” Throughout American history, groundbreaking legislation like the Social Security Act, Medicare, the Homestead Act, and the Interstate Highway Act really weren’t very radical. That’s why they got through.

None overturned entrenched and valued contractual and legislative arrangements. None reshuffled trillions—or in less inflated days, billions—of dollars devoted to the same general purpose as the new legislation. All either extended services previously available to only a few, or created wholly new arrangements.

True so far as it goes—although “creating wholly new arrangements,” as Social Security certainly did, could be described as radical. So let’s take a closer look at Social Security, the crown jewel of the New Deal and the cornerstone of income security for millions of retirees, survivors, and disabled persons today. The program that Congress created in 1935 was extremely narrow in scope, ungenerous at times to the point of invisibility, and with a financing mechanism quite different from the one it has today. As Aaron notes, it took decades for the program to evolve into its present shape—or even to make much of a difference to most working people.

Just like Obamacare, you say. Surely that will change. So why do we need to be listening to Sanders talk about single payer?

Because something’s different this time. After the program became law, Democratic lawmakers got busy almost immediately putting together improvements. Less than four years later, the 1939 Amendments to the Social Security Act corrected a number of deficiencies. Steady work over the next decade, despite repeated attacks from the right, resulted in the 1950 Amendments, which again carried the program forward. And so on.

Obamacare became law in 2010. Since then, however, there’s been little effort to correct its faults. In part due to the constant attacks by Republican lawmakers and other powerful figures on the right, but also to the persistent timidity of the center-right Democratic establishment, hardly anything has been done to really improve Obamacare in the past six years. The recent delay in implementation of the “Cadillac tax” on health coverage was a nice handout to working families, but not even a permanent change, and it leaves open the question how the lost revenue will be made up.

Candidate Hillary Clinton has offered a few ideas for improving ACA: lower co-pays and deductibles, reduce the cost of prescription drugs, moving toward a system that rewards quality and value of care. Allowing Medicare to negotiate lower drug costs and capping out-of-pocket expenses for individuals with chronic health problems would indeed be big improvements. But a lot of details about her plans are still lacking, and her focus on “value” of care could mean a great deal, or nothing much. It certainly won’t inspire voters, whereas Sanders’ call for “Medicare for all” has been testing well for a long time.

Which is where that slogan comes in. What it means, translated to the retail-politics level, is, “The best defense is a good offense.” Progressive Democrats, including Sanders, have learned this in the past couple of years, notably with their proposals to expand Social Security—proposals that play well with the public, despite which Clinton, for one, has studiously not endorsed them. Why would it not be the case that the best defense of the ACA is to go farther in a direction it probably has to go anyway?

Aaron himself implicitly accepts this argument:

Let me be clear: We know that high-quality health care can be delivered at much lower cost than is the U.S. norm. We know because other countries do it. In fact, some of them have plans not unlike the one Senator Sanders is proposing. We know that single-payer mechanisms work in some countries. But those systems evolved over decades, based on gradual and incremental change from what existed before. That is the way that public policy is made in democracies.

Right—but then the question is, When do we get started? When does the Democratic Party get out of its defensive crouch? It’s been six years since ACA passed, and there’s little sign of change. The New Deal Democrats were already making major changes to Social Security, including replacing its basic funding mechanism, less than four years later. Nothing comparable is happening with ACA today. That’s a disturbing and dangerous trend; every year that nothing’s done to improve the structure of the program, make it more generous, and better address participants’ needs, is a victory for its enemies.

Sanders’ proposal is a hard push in the direction Obamacare must take if the goal of universal, affordable health care is to survive—which is to move past the jury-rigged structure of exchanges and Medicaid expansion to one that wields real economies of scale and that everyone can participate in. Sadly, too few Democrats, perhaps afraid of a “Gotcha!” from the Wall Street Journal editorial page, are ready to acknowledge this.

Aaron, for example, raises some reasonable questions about Sanders’ plan: What would happen to special facilities for veterans and service members’ families? How realistic are his assumptions for cost savings? How will the package of services covered be decided upon? Would hospitals go bankrupt? Would we have a shortage of doctors and nurses? Yet he asks them as if not to search for answers, but to demonstrate that there are no answers—just as Republicans have been doing with regard to Obamacare since it was embryonic.

This is not good politics, especially now. Presidential campaigns are the time to unveil grand visions, not to bore the electorate with small-ball proposals. To take a couple rather grim examples, Ted Cruz probably won’t get a chance to find out if he can make Mideastern deserts glow, and Donald Trump probably can’t bar all Muslims from entering the country. But they want to take us in those general directions, which, for their followers, is the point. In a more sane context, some establishment figures on the Democratic side understand this about Berniecare as well. Says Daily Kos’s Joan McCarter:

Here’s where Sanders and Clinton should agree. Expanded Medicare needs to be included in Obamacare. We need the public option added to it. That’s an interim fight that would definitely be worth both campaigns’ time. Indeed, the may lose the whole health care ball game.

Of course, that’s not an “interim fight.” The public option is the heart of the system that ACA needs to evolve into. If Democrats dismiss Sanders and continue to play defense, however, they’ll never get there. Indeed, they could lose the whole health care ball game.

]]>http://peoplespension.infoshop.org/blogs-mu/2016/01/28/the-realism-of-berniecare/feed/0Of Carrots, Sticks, and Disabilityhttp://peoplespension.infoshop.org/blogs-mu/2015/11/02/of-carrots-sticks-and-disability/
http://peoplespension.infoshop.org/blogs-mu/2015/11/02/of-carrots-sticks-and-disability/#respondMon, 02 Nov 2015 21:12:01 +0000http://peoplespension.infoshop.org/blogs-mu/?p=633In the world of Washington, incentives—carrots and sticks—seem to be the answer for everything, including how to get people on disability back to work. But a new study suggests the problem is the same one the Americans With Disabilities Act identified 25 years ago: discrimination.

I took a certain amount of impolite criticism for my last post, in which I decried the “veritable national jihad” against disability fraudsters. The amount of abuse in Social Security’s Disability Insurance (DI) system isn’t anything like the monster it’s made out to be, and it’s unfortunate, to say the least, that the just-passed Bipartisan Budget Act throws more resources at ferreting out fraud and creating stiffer penalties for false benefit claims. For calling the vast overreaction to disability fraud a jihad, I was accused of insulting conservatives and indulging in hyperbole.

I’m not sorry to have used strong language to describe a years-long campaign against DI that’s out of all proportion to the size of the problem (would that as much effort was going into exposing and cracking down on the Pentagon’s cozy relationships with its contractors) by people who seem to have no idea of the challenges facing working people with disabilities. (The Washington Postwas at it again today.)

But if the goal is to get people back to work who have something to contribute and would be better off for it, the real issue is where “incentives” ought to be applied: to disability recipients? or to their potential employers? Washington’s working assumption for a long time—borne out in the new budget act—is that it’s the beneficiaries who need tough love.

A story in today’s New York Times reports on a new study by researchers at Syracuse and Rutgers universities that suggests Washington’s got it backwards. According to the researchers, Lisa Schur of Rutgers and Mason Ameri of Syracuse, discrimination against the disabled is alive and well, even for individuals who apply for jobs in fields where they have strong qualifications. In fact, the more experienced you are, the worse your chances of landing a job if you have a disability. And the nature of the disability doesn’t seem to matter too much—whether it’s a spinal cord injury or Asperger’s Syndrome, employers are just as likely to shy away.

Earlier studies had suggested that better qualifications might help disabled candidates overcome employment discrimination, but the researchers found the opposite. Employers were about 34 percent less likely to show interest in an experienced disabled candidate, but only about 15 percent less likely to express interest in a disabled candidate just starting out his or her career….

“We created people who were truly experts in that profession,” said Ameri. “We thought the employer would want to at least speak to this person, shoot an email, send a phone call, see if I could put a face to a name.” For the gap between disabled and nondisabled to be larger among experienced candidates than among novice candidates, he said, came as a surprise.

The researchers sent cover letters and fabricated resumés to employers seeking to fill accounting jobs; the bosses expressed interest in candidates who mentioned having a disability about 26% less often than for other candidates. One possible answer: disabled workers often require special accommodations, such as wheelchair ramps. But then how to explain the fact that Aspergers, which isn’t a physical impairment, was just as likely to scare off employers as a spinal injury? That points to “a general bias against people with disabilities” as the culprit.

Today, only 34% of working people with disabilities are employed, compared with 74% of others—this despite the fact that the Americans With Disabilities Act of 1990 banned discrimination. Does that mean the law didn’t do any good? No, Ameri and Schur found. Businesses with less than 15 employees—which are not covered by the Act—were least likely to express interest in the inquiries the researchers sent. Publicly traded companies, and companies that receive federal contracts, were more likely to show interest. This is to be expected, based on what we know about prejudice and discrimination in plenty of other areas: that it will continue as long as there are no penalties to deter it and no daylight to expose it to view.

This is a real problem: Disability benefits are paltry, and despite the Reaganesque campaign to vilify them, the vast majority of disabled would prefer to work—if they could. What the new study implies, however, is that Washington has been wrong for a long time about how to get the disabled back to work. “Nudging” them back into the job market, either by making it harder to get benefits, shortening the benefits period for some disabled persons, stiffening the enforcement of anti-fraud laws, or even offering them a carrot by increasing the amount they are allowed to earn by working while still receiving benefits, is not where real action is. The problem is not the disabled themselves, but employers who are deeply biased against them. The government should be focusing on changing their behavior, not working people’s.

]]>http://peoplespension.infoshop.org/blogs-mu/2015/11/02/of-carrots-sticks-and-disability/feed/0The Soft Underbellyhttp://peoplespension.infoshop.org/blogs-mu/2015/10/30/the-soft-underbelly/
http://peoplespension.infoshop.org/blogs-mu/2015/10/30/the-soft-underbelly/#respondFri, 30 Oct 2015 15:06:54 +0000http://peoplespension.infoshop.org/blogs-mu/?p=629Having failed in numerous frontal assaults on Social Security, the Republican congressional leadership several years ago adopted a new strategy for dismantling the program: attack and demonize Disability Insurance, which they consider to be its soft underbelly. With this week’s passage of the Bipartisan Budget Act of 2015, they drew blood.

We’ve been hearing it for years now: Disability Insurance is overgenerous, fraud-ridden, a well-intentioned program that’s mutated into a form of middle-class welfare. Criteria for awarding benefits need to be tightened, or the $150 billion DI trust fund will go bankrupt. The traditional solution for imbalances in Social Security’s trust funds—shifting money between the DI and the Old Age and Survivors’ (OASI) fund—shouldn’t be used unless “substantive reforms” are implemented.

How wonderful, then, that according to the Wall Street Journal, “Social Security will get its first upgrade since the 1980s to fix Disability Insurance,” thanks to a kumbaya moment between the White House and congressional Republican and Democratic leaders. The two-year Bipartisan Budget Act of 2015, which just passed the House and the Senate, shifts money into the DI trust fund to keep it from running out of money in 2016.

In exchange, however, it launches a veritable national jihad against those dreaded disability fraudsters.

According to a summary of the House bill, it “prevents evidence submitted by unlicensed or sanctioned physicians and health care providers from being considered when determining disability.” It expands a pilot project to investigate fraud, in which “Cooperative Disability Investigations (CDI) units, jointly run by the Social Security Administration (SSA) and the Office of the Inspector General (OIG), and consisting of staff from local SSA offices, the OIG, State Disability Determination Services (DDS), and local law enforcement, into a nationwide program.”

In an eerie parallel to the Republican crusade against “voter fraud,” the bill

creates a new specific felony for conspiracy to commit Social Security fraud, punishable by up to five years in prison, fines generally up to $250,000, or both. [It] increases the maximum felony penalty from five years to 10 years for individuals in positions of trust (including claimant representatives, doctors and other health care providers, translators, and current or former SSA employees) who use their specialized knowledge to defraud the SSA, in addition to fines (generally up to $250,000). [And it] increases the maximum Civil Monetary Penalty (CMP) that the SSA can levy against individuals in a position of trust from $5,000 to $7,500 for each false statement, representation, conversion, or omission the individual makes or causes to be made.

Nobody wants fraudulent claimants grabbing benefits not intended for them. And according to news reports bruited by conservative lawmakers and policy entrepreneurs as well as the mainstream press, the problem is quite bad. “A small group of Social Security judges have improperly approved disability claims for nearly 25,000 people who didn’t qualify, costing taxpayers $2 billion over the past seven years,” AP screamed last November, based on a report by the SSA’s inspector general. A few years ago, Puerto Ricans on disability became the latest reincarnation of Ronald Reagan’s “welfare queens” when an unheard-of 63% of applicants from the island were found to have been awarded benefits to in 2010.

Big problem, right? Actually, no. That $2 billion in improper payments over seven years came to less than 0.3% of the $900 billion in disability payments the SSA made during that period. Indeed, it’s almost ridiculously hard to qualify for disability benefits under the present system—hardly the “conveyor-belt approval process” the Wall Street Journal editors describe. According to the Center on Budget and Policy Priorities, only 37% of applicants were awarded benefits between 2009 and 2011, and 14% of those approvals came on reapplication or appeal. Not only that, but thanks to a chronically underfunded SSA with too few administrative law judges to do the job, the process can take years, leaving many qualified applicants ruined or even dead before they receive a check.

(In April, the Washington Post further shocked readers with the news that “some Puerto Ricans” had qualified for disability benefits “because they lacked fluency in English.” The number who had thus obtained benefits turned out to be exactly 218, over a period of two years.)

Disability is hardly the fiscal disaster it’s made out to be, either. The trust fund depleted as a result of such familiar factors as population aging, the integration of women into the workforce, and the (legislated) rise in the retirement age for claiming full Social Security benefits. As these changes work their way through the system, the Social Security trustees report that DI costs peaked at nearly 0.9% of GDP in 2010-13 and will stabilize at a bit less than 0.8% going forward—hardly a crippling burden on society.

So what’s the point of the budget bill’s new holy war against disability fraud? Partly, politics: Departing House speaker John Boehner had been promising for months to exact meaningful “entitlement reform” as the Republicans’ price for expanding the national debt limit and saving the DI trust fund, and an unnecessary and probably costly crusade against fraud is a bone he could throw to the House Freedom Caucus. But the DI portion of the deal is also a critical part of the Republicans’ long game to dismantle Social Security.

Republican and center-right Democratic leaders have had no luck over the past three-plus decades making frontal assaults on the program. The budget deal gave them the opportunity to attack DI, which they consider to be its soft underbelly. Given the complex rules and standards governing who gets benefits and who doesn’t, DI is more like a “welfare” program than OASI, which is based primarily on earnings history. It’s therefore much easier to demonize disability recipients and build a case for throwing them under the train.

Under the (more) stringent new regime, applicants will have a harder time qualifying, many more will abandon the effort to do so, and the program may save a few measly bucks—although implementing and enforcing the new rules, if done properly (a big if), won’t be cheap either. But the GOP will be able to claim a victory at “reforming” a portion of Social Security—as Boehner is already doing. For the public, this clamps even more firmly in place the spurious notion of DI—and, by extension, Social Security as a whole—as “troubled” programs and opens the door a bit wider to future Republican efforts to redesign the whole system.

DI is the perfect subject for this experiment, because what Democratic politician is going to object to stamping out fraud? Certainly not the Obama White House, which like every Democratic administration since Jimmy Carter, is more concerned with the overall balance of federal spending than with the disposition of specific programs like Social Security. Progressive Democrats, both within Congress and without, bear much of the blame as well: The Republican effort to demonize disability has been out in the open for a long time; knowing Boehner and his crew were planning to go after DI this year, they should have mounted a far louder effort to defend the program and denounce the witch-hunt against fraudsters.

Instead, they largely stood by while the Republicans drew blood this week.

The budget bill contains other Social Security-and disability-related provisions as well. On the plus side, it makes it easier for disability recipients to work and earn money while receiving benefits, potentially encouraging those who can to return to full employment. More problematically, the bill closes off the “file-and-suspend” gambit that’s allowed one married partner to file for Social Security and then suspend benefits while the other partner collects. The deferred credits amount to a bigger benefit over time. The change is being billed as ending a loophole that allowed many well-to-do couples to fatten their benefits take when they could just as well do without—although many lower income couples have learned to use the ploy in recent years, providing themselves with some much-needed extra income.

Whether ending file-and-suspend is the right move or not is a tough call, but context is what’s really important here. Such gambits would be less important to lower-income households if Social Security benefits were closer to the level needed to support a reasonable standard of living in old age. At a time when many large corporations pay little or even negative taxes, while private-sector pension are disappearing, why is Congress bothering about file-and-suspend—or Puerto Ricans’ disability benefits, for that matter? Instead, it should be discussing how to modernize our broken retirement system by expanding Social Security.

Yet this is where bipartisan Washington has left us after months of backroom wheeling and dealing. The disabled will pay the price—and the vilification of the Social Security system has proceeded another step ahead.

]]>http://peoplespension.infoshop.org/blogs-mu/2015/10/30/the-soft-underbelly/feed/0Hardship Casehttp://peoplespension.infoshop.org/blogs-mu/2015/10/22/hardship-case/
http://peoplespension.infoshop.org/blogs-mu/2015/10/22/hardship-case/#commentsThu, 22 Oct 2015 11:20:00 +0000http://peoplespension.infoshop.org/blogs-mu/?p=625Means-testing Social Security is a popular position among Republican presidential candidates this election cycle—if not among prospective voters. That means, essentially, turning the nation’s retirement system into a welfare program, targeted at those with real hardships. But how do you figure out who’s a “real” hardship case and who’s not? In fact, it’s well-nigh impossible.

When Alan Simpson and Erskine Bowles, the chairs of President Obama’s 2010 deficit commission, gave up on finding common ground with their colleagues and released their own set of deficit reduction proposal, they called for two big changes in Social Security: gradually raising the eligibility age for full benefits from 67 to 69 and upping the early-retirement age for reduced benefits from 62 to 64. They also directed the Social Security Administration to design a “hardship exemption for those who cannot work past 62 but who do not qualify for disability benefits.”

It all seemed eminently reasonable—so much so that most of our current class of Republican presidential candidates are calling for raising the retirement age and/or some form of means-testing benefits. Jeb Bush, Rand Paul, Marco Rubio, Ted Cruz, Chris Christie, John Kasich, Lindsey Graham, Rick Santorum, and Scott Walker (since withdrawn from the race) all agree on this point.

If they get their way, not only will Social Security benefits be slashed for millions, but something fundamental will have changed: our national retirement system will be transformed from a social insurance program to a welfare program. That’s in keeping with Republican ideology, which has never accepted that Social Security is anything but a disguised form of welfare: a tax transfer from affluent working people to low income retirees.

Getting there would be a lot harder than our intrepid entitlement reformers may think, however. If we take Bowles-Simpson as our case in point, then the idea, again, is to raise the Full Retirement Age (FRA) for full benefits and the Early Entitlement Age (EEA) for reduced benefits, exempting those who aren’t physically able to work from any benefits reduction. After all, that’s only fair. But how do you—or, rather, how does the Social Security Administration—decide who’s eligible for a “hardship exemption” and who can just as well go on working?

There’s the rub, according to Hilary Waldron, who works in the SSA’s Office of Retirement and Disability Policy and recently released a report with the long-winded title, “A Multidisciplinary Review of Research on the Distributional Effects of Raising Social Security’s Early Entitlement Age.” If it takes a while to get through that thicket, Waldron’s conclusion is clear as a bell: “the U.S. population has never been easily separable into a group at risk of hardship and everyone else.” More specifically, “it does not appear that the Social Security–covered worker population can be easily separated into two groups—an unaffected (or low-risk group) and an adversely affected (or high-risk group).”

That means that if a future Republican president and Republican Congress wanted to raise the retirement age without harming at-risk individuals, they’d have a devil of a time figuring out how to do it. Proposals to raise the EEA have been circulating for decades, and numerous studies have been conducted as to the impact. In her paper, Waldron reviewed these, and found that no two experts agreed on how to define hardship, a physically demanding job, or ability to work. Studies Waldron cites come down with estimates of the at-risk population if the EEA was raised that vary wildly: from 3% to 52% in one report, depending on the definition used, to 10% to 33% in another, and from 1.3% to 37.4% in still another.

Raising the EEA seems to affect workers in the top income brackets the least, so some form of hardship exemption would be needed for those lower down. But until you get to the absolute top percentiles, “men claiming at age 62 in the top earnings quartile die sooner than men in lower quartiles claiming later,” which suggests that “even among men of high socioeconomic status, there is substantial variation in risk.”

Incidentally, Waldron notes, this was something the 1935 Committee on Economic Security, the presidential panel that drew up the initial blueprint for Social Security, expected would be the case:

A key conclusion that arose out of the designers’ examination of various approaches to the problem of economic insecurity and their experience in state government was that all workers were at risk, rather than just an unfortunate minority.

Within almost every subgroup you can think of, it turns out, there are variations in risk: workers who spend their careers in physically demanding jobs would seem to be more at risk of not being able to work after age 62 than those in desk jobs, but many of the latter have poor health as well and have to quit. Figuring out how near-retirees’ health status factors into at-risk projections is difficult as well, because individuals’ self-evaluations vary all over the place, making many studies unreliable. Waldron cites

an Australian national health survey in which a self-reported health question was asked of a random subsample of respondents both before and after an additional set of health questions. The authors found that 28 percent of respondents changed their self-reported health status when asked about it twice in the same interview, and that the distribution of self-reported health status was different between respondents who were twice interviewed and those who were once interviewed. The tendency to revise responses varied by age, occupation, and income.

The same goes for mortality: It’s hard to use life expectancy as a factor in setting a cut-off for eligibility for a hardship exemption, because studies haven’t found any such bright line; instead, it follows a gradient. In other words, life expectancy doesn’t drop off dramatically at any one point on the income spectrum; it declines gradually as one moves from the highest to the lowest incomes percentiles. Any attempt to draw a bright line would be arbitrary and would risk leaving many individuals who need it without the option of retiring early. The same goes for education, another study found.

Studies that attempt to identify a group of workers “at risk” of not being able to work past 62, for instance, find themselves contemplating an extremely heterogeneous group that would be very hard for Washington to target with a hardship exemption. One study that divided the population into deciles according to health and longevity risk found so little difference between some of these subgroups that “a proposal designed to apply to the bottom 20 percent of the male lifetime-earnings distribution could be off by 20 percentage points and actually apply to the bottom 40 percent.”

This is one very important reason Social Security was conceived by Roosevelt and his advisors as a social insurance system: because old-age income isn’t just a concern for the have-nots; otherwise, up and down the income curve, disastrous reversals of fortune would be a very real threat. As Waldron notes, “The less this target population [of have-nots] can be readily identified, the less confident we can be that the welfare framework [for Social Security] has empirical support.”

Of course, it’s always possible to cobble together some kind of standard, given the will and the resources. But then there’s the problem of applying it. The SSA is already underfunded and understaffed. Applying convoluted, in all probability illogical “hardship tests” to each of the 75 million baby boomers now wending their way into retirement will only make matters worse. Because nowhere in the Bowles-Simpson plan, for example, was any money allocated to help the agency staff up to meet the new administrative task.

All is not lost, however. For those determined to keep more workers working past age 62, Waldron’s paper notes some hopeful facts and figures. In one 1986 study, “controlling for occupation and education, the author found that individuals with discretion over activities and the pace of the job were almost twice as likely to be working as those with low levels of discretion.” The same study found that “being a member of a labor union was also positively correlated with the likelihood of working.”

So there’s a goal for our entitlement-reforming presidential hopefuls: mandating kinder, gentler workplace rules, and promoting union membership. Let’s see if they take the hint.

]]>http://peoplespension.infoshop.org/blogs-mu/2015/10/22/hardship-case/feed/1Social Security’s future is being written in the streets of Fergusonhttp://peoplespension.infoshop.org/blogs-mu/2015/08/25/social-securitys-future-is-being-written-in-the-streets-of-ferguson/
http://peoplespension.infoshop.org/blogs-mu/2015/08/25/social-securitys-future-is-being-written-in-the-streets-of-ferguson/#commentsTue, 25 Aug 2015 21:26:00 +0000http://peoplespension.infoshop.org/blogs-mu/?p=618Bernie Sanders’s confrontation with members of Black Lives Matter should teach a lesson to everyone engaged in the struggle to defend Social Security: Unless the campaign for economic equality recognizes the need to prioritize racial equality as well—that racial and economic issues are not separate—preserving and expanding Social Security will become increasingly difficult.

In politics, context is everything. The most passionate advocacy, even for an utterly righteous cause, can sound presumptuous when the advocate ignores another issue more important to the same audience. Witness Sen. John McCain’s recent humiliating treatment by the Navajo, who chased him off their reservation on August 16, when he came to discuss a feel-good memorial to the World War II Code Talkers—but refused to address complaints that he had failed to protect tribal water rights or to oppose a copper mine that’s about to be built on Oak Flat campgrounds, an area of spiritual significance to the Apache.

On the opposite end of the political spectrum, Sen. Bernie Sanders recently received a similar lesson. On July 18, Black Lives Matter protesters disrupted a Netroots Nation forum in Phoenix featuring Sanders and former Maryland Gov. Martin O’Malley; on August 8, Black Lives Matter struck again as two members took over the podium just as Sanders was about to start speaking.

On both occasions, and within seconds, the coalition progressives Democrats need to hold together to win elections seemed to fall apart, in a very ugly way. According to the Seattle Times, “some in the mostly white audience booed and hissed as they urged protesters to let the senator talk. A few yelled for police to make arrests.” Marissa Johnson, one of the protesters, “shot back at the crowd, ‘I was going to tell Bernie how racist this city is filled with progressives, but you did it for me,’ accusing the audience of ‘white supremacist liberalism.’”

Sanders himself seemed not to believe what he was hearing.

“I am disappointed that two people disrupted a rally attended by thousands at which I was invited to speak about fighting to protect Social Security and Medicare,” he said. “I was especially disappointed because on criminal justice reform and the need to fight racism there is no other candidate for president who will fight harder than me.”

The coming weeks will show whether the Sanders campaign fully comprehends how arrogant and paternalistic that sounded. It’s true that Social Security is disproportionately vital to disabled and retired African American workers and their survivors, but in our market-based economy, the first priority is always jobs—and the opportunity to qualify or be considered for a good job, not to mention one’s prospects once that job is obtained, are still deeply impacted by racial prejudice. Likewise, while Social Security provides a dependable minimal stream of income in retirement for lower-income working people, what kind of life does that provide when one is effectively red-lined out of middle-class neighborhoods, subjected to constant police intimidation and violence, and victimized by the “poor tax” through lack of access to reasonably priced banking and other services?

It’s not just that Social Security isn’t politicians’ magic path to the hearts of American working households. The problem goes back to the fact that in American politics, economic and racial issues are treated as separate and, generally, unequal, when in fact they are closely bound up.

On the 80th anniversary of the passage of the Social Security Act, it’s important to remember this lesson. That law, along with much of the legislation that launched the modern welfare state, was formulated at a time when black people were effectively barred from voting in the region they occupied in the greatest numbers. Politically, much of the New Deal was geared to appeal to urban white working families—the core of the Democratic Party outside the South. So it was easy to address economic and racial issues discretely, or to argue that if the one is taken care of, the other will surely follow. Improvements to Social Security over the next 35 years enabled blacks to enjoy its benefits, but liberal Democratic politicians continued to fool themselves that economic issues were, somehow, color-blind.

It’s been a long time since this made any political sense. The beginnings of the contemporary conservative counterattack against the New Deal—including Social Security—date from the early 1970s, when the law-and-order backlash against the Civil Rights Movement was in full swing. In those years, the state’s preferred response to the problems of black Americans switched from housing, education, and social services to gentrification, militarized policing, and three-strikes-you’re-out laws. Programs to help the poor were reinterpreted as doing them harm by reducing their motivation to self-improve. Aid to Families with Dependent Children (“welfare”) was the first target, in part because it wasn’t an “earned” benefit and therefore easy to caricature as a giveaway.

At the same time, however, Social Security came under attack. Drastic cuts were being proposed under the Cater administration, and the retirement age for full benefits was raised for the first time—effectively cutting benefits—in 1983; by then, many on the right and center-right were regularly referring to Social Security and Medicare as “entitlements,” a form of middle-class welfare. What was bad policy for the African American poor, it stood to reason, was also bad policy for the white middle. Members of the Reagan administration openly argued that Social Security undermined families’ incentives to support their older members and that it eroded personal savings and encouraged dependency on government—a position Mitt Romney merely reiterated in his notorious “47%” speech in 2012.

As for the police violence that has caught the public’s attention in the wake of Michael Brown’s and Eric Garner’s killings, Bernie Sanders certainly isn’t the only presidential candidate who has yet to grant it the urgency it demands. Real estate mogul Donald Trump declared that if anyone attempted to take over a podium in the same manner that Black Lives Matter appropriated Sanders’s, he’d fight them, and accused Sanders of “weakness.” Hillary Clinton, confronted in her turn by BLM activists, evaded their question whether anything “in her has changed” since the killings, given that she had lobbied for the 1994 Violent Crime Control and Law Enforcement Act that helped propel America’s incarceration levels to the highest in the world. This despite the fact that her husband, former President Bill Clinton, who signed the bill, has publicly regretted doing so.

Republican insensitivity on the issue is no surprise. (Wisconsin Gov. Scott Walker, asked if he’d meet with BLM organizers, said, “I meet with voters. Who knows who that is?”) Clinton’s evasiveness extends to her statements on Social Security, which have distinctly not included support for expanding the program. But Sanders’ response—thus far—to BLM is especially disturbing, since he has set himself up as the standard-bearer for progressives. As such, part of his mission has been to try to win back the support of working-class whites in parts of the country, like the South, where they have turned away from Democrats. Social Security is a big part of what he hopes will be his leverage. But that can’t mean ignoring, or downplaying, an issue that’s a matter of life and death to African Americans.

If progressives want to protect Social Security—as Sanders clearly does—they’ll have to understand that racial and economic issues are not separate. Racial injustice bolsters economic injustice, and the cultural arguments against policies that promote social and economic equity between races can be deployed just as easily against white working people. One of the lessons of the trail of African American lives in the streets of Ferguson, Baltimore, New York, St. Louis, Oakland, and other places is that these victims’ communities can’t wait any longer for the conditions of their lives—which are dictated, to a great extent, by police and prosecutors—to improve. It’s hard to give priority even to Social Security when you live under what’s quickly evolving into a quasi-military occupation.

White progressive politicians need to learn this lesson, and quickly, because otherwise their coalition will fracture and their opponents will be encouraged once again to extend their prescriptions for social “reform” from the urban poor to the white middle class. It’s no answer to lecture African Americans, as Sanders did, that he’s their best hope of having their needs addressed, despite his failure to speak directly to those needs. They’ve heard it too many times before.

]]>http://peoplespension.infoshop.org/blogs-mu/2015/08/25/social-securitys-future-is-being-written-in-the-streets-of-ferguson/feed/1The liberal critics of Big Governmenthttp://peoplespension.infoshop.org/blogs-mu/2015/06/08/the-liberal-critics-of-big-government/
http://peoplespension.infoshop.org/blogs-mu/2015/06/08/the-liberal-critics-of-big-government/#respondMon, 08 Jun 2015 13:48:59 +0000http://peoplespension.infoshop.org/blogs-mu/?p=614What does it mean to be a “progressive” or “liberal” in America today? More than anything else, perhaps, it implies a determination to defend the signature achievements of the New Deal/Great Society eras: Social Security, Medicare, unemployment insurance, and a collection of related programs. And that’s just the problem, say their critics on the right: for progressives, government is the answer for everything. But are conservatives the only ones concerned about the growth of the administrative state—of bureaucracy? Should progressives be worried as well?

We’re used to conservatives, from Ron Paul to Rush Limbaugh, complaining about Big Government. Believe it or not, however, there was a time when liberals—social scientists, lawyers, some members of the Roosevelt administration, even the philosopher John Rawls—worried about the consequences of a liberal state built on regulation and government services and the people’s loyalty to the institutions responsible for them. Anne Kornhauser’s new book, Debating the American State: Liberal Anxieties and the New Leviathan, 1930-1970 (University of Pennsylvania Press), reintroduces the liberal critics of Big Government, arguing that their concerns are still relevant today, particularly since Edward Snowden’s revelations about the National Security Agency refocused concern on the surveillance bureaucracy.

Discussing the implications of her book for today, Kornhauser, a historian at City College of New York, ticks off a number of other areas where the New Deal institutions and their progeny are not fulfilling their expected role, including health care and regulation of the financial services sector along with national security. To this I might add Social Security and, in particular, Disability Insurance—programs that are harder today to improve and update because they’re underfunded and/or constantly under siege from the right—although some progressive Democrats are now trying to reverse the momentum.

Has the problem of Big Government become so thoroughly politicized that it’s impossible to grapple with? Why aren’t more people working to remake the New Deal institutions, rather than tear them down? I got a chance recently to ask Kornhauser these questions and to explore the issues she poses in Debating the American State. The administrative state is necessary, she told me, but it needs to be made more “democratic”—more transparent, more open to citizen participation, and less dominated by powerful interests—and we can expect more people to insist on this going forward. Other liberal scholars, too, she says, are starting to investigate the problems of bureaucracy, and we’re bound to hear more of their critiques in coming years.

What got you interested in the New Deal administrative state and the controversy over it? Did you expect to find so much anxiety about it on the left?

I became interested in the New Deal because I was interested in liberalism and its history. It was during the New Deal that the Democratic Party first identified itself as “liberal,” in part to distinguish itself from earlier Progressive moralism, and in part to differentiate itself from the more libertarian bent of the Hoover-led Republicans. First as a candidate and then as president, Franklin D. Roosevelt led the way in associating the Democrats with the term “liberalism.” It is not entirely clear what he meant by this; as is the case with liberalism in general, more often it defines itself as a kind of critique of the status quo than as a positive program for change.

The bureaucratic aspect of the New Deal stood out as a fundamental point of contention and concern among certain liberals and some on the left as well. We associate this set of concerns—those related to what the political discourse now calls Big Government—with a conservative attack on liberalism, but bureaucracy was a sticking point for some of the very people who built the administrative state in the first place.

Anxiety may be too clinical a word, even though I chose it. But I found liberals, including some in the FDR administration—who did express concerns about the new, centralized bureaucracy that came with the New Deal and expanded rapidly with World War II. The problems they identified had to do with the effects that a large public bureaucracy could have on constitutional democracy. These people— social scientists, lawyers and legal academics, philosophers, social critics—worried about the lack of representation of various interests and open deliberation in bureaucratic government. They also worried about the erosion of legality. Bureaucracy operates more according to informal and flexible guidelines, and less on the basis of hard and fast rules that we associate, not always correctly, with law. Bureaucrats, as opposed to lawmakers, have much more discretion in how they make decisions and they are less accountable to the public.

What’s at stake for us today? Are these questions still relevant for progressives when it seems like most critics of “bureaucracy” are right-wing?
They are absolutely relevant. Bureaucratic government—which is necessary, I might add, for regulation, for social services, and for a national security apparatus—has become bigger and more entrenched, less accessible to the public, less transparent, more subject to the suasion of the powerful interests it regulates. If you want these things—regulation, social services, national security—then you have to put up with a lot of bureaucracy. Personally, I value highly the first two and I know we need the third in some capacity as well, though I believe the national security state in particular has grown out of control and impinges too much on the individual rights and liberties of Americans citizens—and, for that matter, other people around the world.

The question is, How can we have what some people in New Deal era called “responsible bureaucracy”? This is not just a question for Americans. Other democratic countries are struggling with this problem as well. I do not have the answer, and neither did the people I studied. But I think they got the questions right, and they began to think through some possible checks on the growing “leviathan”—as the administrative state was labeled, even by progressives of the time such as Charles Beard.

It seems a bit far-fetched to think that the New Deal model of administration, social programs, etc., could have any relation to the Nazi state. And yet a very interesting group of émigré intellectuals made this connection in the 30s and 40s. Were they justified in doing so?
Yes, they were justified in connecting the two systems’ growing use and abuse of bureaucracy, executive-centered government, and emergency powers, a development that characterized many modern states at the time. A global crisis in capitalism and a global war accelerated reliance on the administrative state, and that was the case no matter what kind of government was in charge. The issue for the German émigré intellectuals became: how to manage the administrative state in more “normal” times—both in the US, and especially in postwar Germany, where many of the émigrés served as advisors to the American occupation government. It was not so much the social programs that evoked the parallels, but the reliance in each country in the ’30s and ’40s on a top-down, emergency-driven, discretionary form of government. Of course, the differences were tremendous and more important than the similarities. But the similarities could be used as object lessons for how to think about the role of law and democracy in the modern state.

Can you summarize briefly your thinking about John Rawls’ contractual theory of justice and how it relates to the administrative state? My impression is that he ultimately didn’t think these institutions were supported by a democratic society.
John Rawls was an ideal theorist. That means his political and moral philosophy centered on ideal principles and ideal institutions. From here, he worked backward to critique actually existing institutions in a constitutional democracy based on their adherence to these principles of justice. Although he did not say so in his most famous book, A Theory of Justice, the constitutional democracy he was most concerned to critique and perfect was our own.

In my book, I argue that part of what drove Rawls to devise this critical liberalism was the growing administrative state. In my view, his notion of justice as fairness would force significant reform of many of our administrative institutions. Rawls didn’t reject administrative institutions, but felt they should be put in their place–guided by the rule of law and limited by deliberative democratic institutions such as legislatures. Rawls was deeply critical of the American state, once describing many of our political institutions as “riddled with grave injustices.”

Rawls’ social contract theory, or theory of justice, posited that under ideal conditions—chiefly, those in which people were stripped of their positions in society, were rational, and were free, that is, dominated by no one—people would consent or “contract” to live in a society guided by two principles of justice. Put crudely, the first insisted on equal essential liberties for all; the second permitted social and economic inequalities only in a society that afforded true equality of opportunity, where any inequalities that did exist were of “greatest benefit to the least advantaged.”

These principles become a kind of test of the justice, or fairness, of actually existing institutions. My reading of Rawls is that many of the institutions in the modern American administrative state would fail this test. Rawls did not reject administrative institutions, because he realized they were necessary for the kind of regulatory welfare state he valued. But he felt they should be guided by the rule of law and limited by deliberative democratic institutions such as legislatures.

Arguably, both programs like Social Security and institutions like the Pentagon and Homeland Security are all parts of the administrative state. Yet it seems that when we talk about the administrative state, we’re mainly talking about the former, not the latter.
I think that a significant imbalance did exist regarding which parts of the bureaucracy we focused on. But in recent years, the balance has been shifting toward more discussion of the national security state. We no longer live in the immediate aftermath of 9/11, yet we have a huge extra layer of “security” that has evolved in its wake. Republican Sen. Rand Paul is pretty much running for president on an anti-bureaucratic platform with Homeland Security and all that goes with it as Exhibit A. The Snowden revelations kicked off a national, even international, conversation about the national security side of the administrative state, and I think that is good.

However, it is very hard for any politician to oppose “more” national security, and not just for cynical political reasons. It is much easier to argue to the American public that the federal government is going to do more to protect them, rather than less, even though less is sometimes more. That, I think, is what we have learned recently, through Snowden and others. How much do we want to limit our own freedom of action, of speech, of movement, in order to contain a shadowy, ever-changing enemy? And how many people do we want to—need to—kill to feel safe, and at what cost to the rule of law? Even the Republican-dominated Senate, in its reauthorization of the PATRIOT Act, is pushing for “a retrenchment…of government,” as the New York Times recently put it.

In the 60s, people talked (to some extent) about democratizing the administrative state, making it more answerable to the people. Is this possible? Why hasn’t it happened in the US?
It is possible to make bureaucracy more or less democratic—within certain bounds. I will not go into the story of how those in the 60s and 70s were thwarted, in part because there is a healthy debate about whether the reforms they sought were all that democratic in the first place. But this much we know: in bureaucratic organizations, there can be more or less transparency, more or less citizen participation, more or less domination by the most powerful interests.

As to why the US has not moved toward a more democratic version of the bureaucratic state, I do not think I can adequately answer this question. I can say that there are some reasons that are particular to this country and some that are not. Bureaucracy is notoriously difficult to change. People in bureaucracies of all kinds develop vested interests in keeping things as they are—keeping their jobs, their connections, their positions of power. And there is a structural tension between some aspects of administrative governance and democratic norms and practices.

In this country, I think the political will is missing. I do not think it would be wrong to read into my book that there are very few people who have pushed or are pushing for the democratic reform of bureaucracy. And even if there were more naysayers, who would pay attention? It is not a very sexy issue!

Finally, the debate about democratizing bureaucracy has been polluted by partisan warfare over Big Government. We have had for quite some time and will continue to have Big Government. The question is not big or small, but what kind and to what ends?

Despite all the anxiety about the administrative state, and all the rhetoric (especially on the right) against it, it seems to keep growing, even under conservative presidents and congresses (Department of Homeland Security, etc.). Do you think this will just continue, or should we expect a moment of reckoning when it has to become more democratic or morphs into something very different?
A bureaucratic Armageddon? Gosh, I hope not! My mentor often reminded me that historians cannot predict the future. He was right. I honestly do not know, but you are right, the leviathan just keeps growing. I will say this: one thing that could organically reverse the trend of the burgeoning central state is the size of the population. Parts of the state are responsive to the people it serves, and the rate of population growth in the US has generally been declining for quite some time.

Social Security, Medicare, and a host of other vital programs have been under continuous threat for 35 years now—some, like AFDC, have been abolished. Is this in part because liberals have never been able to formulate a consistent public philosophy that includes these programs, or get it accepted?

Yes, I think so. Liberals have been better at justifying the goods that particular programs can deliver than at articulating the costs that we must pay—and I do not mean taxes!—to have them. Nor have liberal politicians been particularly adept at coming up with creative solutions to some of these problems, such as bureaucratic capture, a lack of transparency and fairness, and a sense of powerlessness among citizens to influence the programs that affect them. You can see this with the Affordable Care Act.

On the other hand, Social Security and parts of Medicare seem to be different from other parts of the administrative state in that they pay for themselves directly through payroll taxes. So they’re not always painted with the same “bureaucratic” brush. Is it possible that some parts of the administrative state are less open to attack because people have a stronger sense that they “own” them?
As the author of an exhaustive study of Social Security, you are probably better positioned to answer this question than I am. But I will say that the literal investment that Americans make in these programs likely imbues them with a kind of metaphorical investment as well. Americans may well be less inclined to feel alienated from these programs than from those that treat them more like supplicants than citizens.

One problem, however, is that, looking at, say, the European model, if we treat Americans more equally in the realm of health care—rather than maintaining the double standard of Medicare and Medicaid—we are going to need even more bureaucracy. And there are costs to be paid there as well. Judging by national health care systems, it simply is true that if we treat Americans more equally as health care recipients, all but the very rich (and even they in some cases) will have to wait longer for certain medical procedures and will have less say in many of their health care decisions.

There is a middle ground, and I think the Affordable Care Act was one effort to find a piece of that ground. The impulse behind it was largely a good one: to enable more Americans to have health coverage. Yet, as I mentioned, we can see how quickly it became enmeshed in a host of bureaucratic problems of its own. These were dealt with defensively and the administration was clearly unprepared for them.

What was the most surprising thing you found in researching your book?
Actually, two things surprised me. One is that, in the years since I had started writing the book (it began as a Ph.D. dissertation), liberal scholars across the gamut of disciplines had published books and articles about the problems of bureaucracy. Obviously, there have always been some critiques of this kind. But they have noticeably picked up in the last half-dozen years or so.

Along with other scholars, I attribute this to the combination of the growth of the national security state after 9/11 and the financial crisis of 2008, which revealed a pattern of under-regulation and a nightmarish bureaucratic complexity that governed the banking industry. The first awoke people to the continuing and bipartisan proliferation of the national security state; the second suggested the extent of the financial industry’s capture of the financial regulatory apparatus. Finally, scholars realized that the increasingly partisan nature of American political discourse and policy debates had made the problems of government bureaucracy seem solely political in nature rather than structural as well.

The other surprise was the intellectual connection I discovered between John Rawls and the themes of the book. For example, Rawls read some of the German émigrés’ writings and thought about some of the same issues they did. His work has implications for thinking about the administrative state that I did not at first appreciate.

]]>http://peoplespension.infoshop.org/blogs-mu/2015/06/08/the-liberal-critics-of-big-government/feed/0A Lifeline, Not a Safety Nethttp://peoplespension.infoshop.org/blogs-mu/2015/05/19/a-lifeline-not-a-safety-net/
http://peoplespension.infoshop.org/blogs-mu/2015/05/19/a-lifeline-not-a-safety-net/#respondTue, 19 May 2015 18:00:12 +0000http://peoplespension.infoshop.org/blogs-mu/?p=609What’s the biggest source of income for Americans in the last years of their lives? Whether you live to 65, 75, or 85-plus, no matter if you’re married or single, the answer is the same: Social Security. And in the you’re-on-your-own, 401(k) era, this hard fact is only becoming more so.

More Americans are elderly—over 65—today than at any time in the nation’s history, and more of these older people are living to a really advanced age than ever before. It’s safe to say we collect more data on them than ever before, as well. That means we’ve never had as good a chance to study the financial health of the elderly.

Using data from University of Michigan’s Health and Retirement Study (HRS), sponsored by the National Institute on Aging, the Employee Benefit Research Institute has just released a fascinating analysis of individuals who responded to the HRS survey in 2010 and died before the next, 2012 survey. Admittedly a bit morbid, the study provides a snapshot of older Americans’ fiscal status at more or less the time they died. This gives us a chance to compare the economic endgame for different cohorts of elderly: those who died in early retirement (65 to 74), middle-period retirement (75-84), and late old age (85-plus). For further comparison, EBRI even threw in the cohort of Americans who died in late working age, 50 to 64.

Some of the findings are interesting but perhaps not surprising. Invariably, couples are far better off than single-person households, whether by income, total assets, non-housing assets, indebtedness, or level of dependence on Social Security. On that last point, the study results are dramatic: Two-thirds of income for couples between 75 and 85 comes from Social Security, and a sky-high 74.4% for single-person households. For 85-plus households, the figures are nearly as formidable: 61.5% and 67.1%, respectively.

That makes Social Security not a safety net in old age, as it’s sometimes termed, but quite literally, a lifeline. Underscoring the point, EBRI looked at the non-housing assets, in 2010, of households with members who died in 2010-12. The results were stark: For the oldest couples, more than one in four (26.3%) had less than $10,000 socked away; for those aged 65 to 74, the figure was more than one in three (36.9%). Things looked even bleaker for singles: Fully half of those 85 and over had less than $10,000 still put away, while a scary three-quarters of the 50-to-64 crowd fell into that category.

What’s especially disturbing about these numbers is that they actually get a bit better for the oldest households. In the classic scenario, we’re supposed to accumulate assets during our working years and gradually pay them down during retirement. What we see here is quite different. People who lived to be 85 and older were somewhat more financially healthy, but those unfortunate enough to die before they turned 65—while they were still preparing for retirement, in other words—were less so. For the oldest seniors, assets accumulated were more substantial and debt was less prevalent (14.9% of 85-and-over couples had debt, versus 41.8% of those 50 to 64.)

That last point isn’t surprising—people in their final years before retirement are expected to be working to reduce debt overhangs accumulated during their family-raising years. But it’s disturbing that more than one in three of couples aged 65 to 74 (36.9%) still have debt. They’re not starting out their golden years promisingly.

EBRI research associate Sudipto Banerjee, who wrote the report, ventures no guesses why younger retirees appear so much less likely to be financially secure than older ones, and a number of factors obviously are involved. Individuals who die in their late working years or early days of retirement may have health problems that eat up their nest eggs. They may work at low-paying, physically taxing jobs that shorten their lives and never permit them to accumulate substantial old-age savings.

I would suggest another factor: the disintegration of the US retirement system. The EBRI study sample is intriguing because, age-wise, it straddles the last major beneficiaries of the old system centered on defined-benefit pension plans that paid out guaranteed benefits throughout retirement, and the you’re-on-your-own era typified by 401(k)s and other defined contribution plans that make no such promises.

A substantial percentage of the 85-year-olds EBRI studied are likely to have spent most of their working lives at a stable job that vested them with a guaranteed pension. That enabled them to hold onto some portion of their savings until very late in life. By contrast, the working years of those who died before age 64—meaning they were born after 1955—coincided with corporate America’s shift to 401(k)s. Throughout their careers, they faced a series of grim tradeoffs between saving for retirement, for housing, for continuing education and training, for their health care, for their children’s health and education, and for a variety of other necessities. They wound up with fewer assets—more than one third, 37.2%, died with no non-housing assets at all—and higher debt levels. This despite the fact that their household income was much higher than the oldest retirees’, according to EBRI’s findings.

Because of their lack of assets, “young-old” households are almost as dependent on Social Security as the “old-old.” Social Security supplied more than half of household income for couples aged 65 to 74, compared with 61.5% of those 85-plus. Single-person households under age 74 were actually more Social Security dependent, at 71.9% versus 67.1% for singles in the 85-plus group.

So let me revise my earlier statement: Social Security is not just a lifeline—it’s becoming a lifeline sooner for people in old age. Originally designed as a base income for America’s working people, thanks to the devastation of lifetime employment and traditional, employer-based pensions, Social Security is becoming the whole ballgame: without it, seniors face a financial cliff not in extreme old age, but in many cases, soon after they cease working.

]]>http://peoplespension.infoshop.org/blogs-mu/2015/05/19/a-lifeline-not-a-safety-net/feed/0Why Hillary Clinton Is Beyond the Palehttp://peoplespension.infoshop.org/blogs-mu/2015/04/24/why-hillary-clinton-is-beyond-the-pale/
http://peoplespension.infoshop.org/blogs-mu/2015/04/24/why-hillary-clinton-is-beyond-the-pale/#respondFri, 24 Apr 2015 21:45:44 +0000http://peoplespension.infoshop.org/blogs-mu/?p=604This is a bit off-topic for this blog, but it has to be said: By her calculated failure to take a stand on the Trans-Pacific Partnership, the former secretary of state has made herself absolutely unacceptable as a presidential candidate for working Americans.

It’s crunch time for the Trans-Pacific Partnership (TPP), the most sweeping multilateral trade agreement since NAFTA. Fast-track authority for the president, gussied up with some face-saving amendments to make it look like Congress will have a real debate when Obama submits the deal to lawmakers later this year, has passed out of committee in both the House and Senate. That means fast-track will be decided upon in a matter of days or weeks.

I won’t take up a lot of space explaining why TPP is a disaster for American working people. Read this excellent summing-up from YES! Magazine and find out, if you don’t already know. The agreement would make it next to impossible for the US (or any other signatory) to have an industrial policy that nurtures new industries. It would subject any law that multinational corporations chose to challenge–on the environment, on workers’ rights–to a kangaroo-court “arbitration” process. It would leave currency speculators free to impoverish whole countries during a financial crisis. It’s written entirely to advance the dominant position of big capital in the global economy.

Only a politician hopelessly indoctrinated by and dependent on the 1% would ever support such a thing. That would include Barak Obama, who has been complaining tirelessly that TPP’s opponents don’t get it–and failing to address even one of the serious concerns that they’ve expressed about the deal. Just not on the wavelength of a Harvard Law-educated, former University of Chicago Law faculty member, and friend of the Pritzker family, I guess.

Which brings us to his former secretary of state, who’s been traveling the country, hopping from one fast-food outlet to another, proclaiming her dedication to helping the 99%. Yet she was deeply involved in the TPP negotiations when she ran the State Department, when she called it “the gold standard in trade agreements.”

Now, her aides say,

She will be watching closely to see what is being done to crack down on currency manipulation, improve labor rights, protect the environment and health, promote transparency and open new opportunities for our small businesses to export overseas.

She herself said last week,

Any trade deal has to produce jobs and raise wages and increase prosperity and protect our security. We have to do our part in making sure we have the capabilities and the skills to be competitive.

Pick through those platitudes with a fine-toothed comb, however, and you won’t find the slightest hint what her position really is–this despite the fact that we now have a detailed knowledge of TPP thanks to the good services of Wikileaks and others (and no thanks to the administration that Clinton served with little distinction for four years).

This is not just unacceptable, it’s an insult to the workers whose champion she claims to be. TPP is a turning point: a major step forward in cracking-open of national and local economies for the benefit of global banks, speculators, and corporations. What takes place in the next few days and weeks on Capitol Hill, where Clinton once served as a senator, may have a greater impact on American working households than anything she actually does if she’s elected president.

She must take a clear position on TPP for voters to have any idea what kind of a candidate she is. Her husband, it was, who muscled NAFTA through Congress over 20 years ago. Her only clear opponent for the Democratic ticket right now, Martin O’Malley, is squarely opposed to TPP (and has no doubt ruled himself out of quite a few high-end dinner invitations as a result). But given her stature, and the possibility she might enter the White House in less than two years, Clinton could actually influence the outcome if she properly laid out her position–a position it’s inconceivable she doesn’t already know.

Instead, she appears to have calculated that if she waits long enough for the votes to be cast in Congress, she can avoid taking a position, then declare herself once it’s all over. No one will know who the Democratic nominee will be for at least a year, time enough for voters to figure that what’s done is done.

That’s how you do politics, is one way to look at it–a glance at Rand Paul’s contorted efforts to kow-tow to the hawkish Republican establishment on foreign policy is enough to prove that. But that just goes to show how debased our so-called democratic politics really is. Clinton has scared almost any opponent out of her way by dint of money, connections, and sheer tabloid presence. Much of the progressive wing of the Democratic Party is now reduced to puzzling over ways to somehow reach her and win her over–preliminary, she surely reasons, to throwing in the towel and backing her for fear of a Republican victory.

But, as the long history of the war against Social Security underlines, the Democratic center-right is at least as lethal to working people as the Republican right. Hillary Clinton gives voters no excuse for glumly getting behind her–with her contemptible exercise in triangulation on an issue as momentous as TPP, she’s already betrayed them. The important thing is to get out in the streets, sound the alarm, and stop TPP now, by any means necessary–far more important than whichever party deposits the next occupant in the White House.

]]>http://peoplespension.infoshop.org/blogs-mu/2015/04/24/why-hillary-clinton-is-beyond-the-pale/feed/0The Meaning of Harry Reid’s Departurehttp://peoplespension.infoshop.org/blogs-mu/2015/04/03/what-harry-reids-departure-means/
http://peoplespension.infoshop.org/blogs-mu/2015/04/03/what-harry-reids-departure-means/#commentsFri, 03 Apr 2015 17:38:57 +0000http://peoplespension.infoshop.org/blogs-mu/?p=593For the last decade, Harry Reid has been a bulwark against efforts by Republicans and members of his own party to send the core of the New Deal achievement down the road to oblivion. Other Democratic lawmakers may be equally committed, but almost none have the same close emotional ties that he possesses to the Rooseveltian state.

When Senate minority leader Harry Reid announced last week that he won’t run for reelection in 2016, the first thing that flashed through my mind was his age: he’s 75. Only nine senators are older than Reid, and only two of them are Democrats. That underscores how few people still serving in the Senate were born during the New Deal, the period that formed the modern US government, with its social protections, administrative apparatus, and (not so happily) military-industrial complex. For the past 35 years, roughly corresponding to Reid’s career in electoral office, the legislation that Washington enacted during the Great Depression has been a war zone, constantly under attack from Republicans and center-right Democrats.

Reid’s career has been defined by the effort to protect and extend the New Deal legacy. He grew up desperately poor in a Nevada mining town called Searchlight, and his family experienced first-hand the difference that Roosevelt’s accomplishments made in their lives. As Nicholas Lemann wrote in an excellent 2010 New Yorker profile,

He likes to say that his parents’ religion was Franklin D. Roosevelt; practically the only good thing that ever happened in the life of his father was joining a union. “The American government is the greatest force for good in the history of mankind”; Social Security is “the greatest social program since the fishes and loaves.” Sig Rogich, a Nevada adman who worked in George H. W. Bush’s White House, and who, like most establishment Republicans in Nevada, is backing Reid over Sharron Angle, told me that during many evenings at his house he and Reid have relaxed to old Woody Guthrie songs on the CD player—“poignant songs about society and the poor.”

That last bit may be sentimentalized, but Reid seems to have not forgotten, as many younger Democratic politicians have, how class differences define politics—as they must.

“I have made no secret of my antipathy toward the second President Bush,” he wrote. He added that Bush “is an ideologue who has done incalculable damage to the government, reputation, and moral standing of the United States of America.” He twice publicly called Bush a liar, explaining, “When one lies, one is a liar.” Late in his presidency, Bush summoned Reid to the White House and tried to appease him. “I never went to Kennebunkport as a kid,” Reid recalls. “I never went anywhere. And I’ve got no blue blood in my veins, just some desert sand. So as he and I sat there in the Oval Office, I said little in return.”

In the small world of political Washington, it’s extremely unfashionable to say such things without swiftly taking them back (far-right Republicans often get a pass, since, the conventional wisdom has it, there’s nothing to be done about them), so Reid, a former boxer, is often characterized as gaffe-prone. Except that he generally means what he says. To me, one of his finest rhetorical moments came in 2005, at the height of Alan Greenspan’s cult of personality, after the Federal Reserve chair, who had punched President Bush’s ticket when he sought support for his mammoth 2001 tax cuts, testified before Congress about the need to cut Social Security and Medicare:

“I’m not a big Greenspan fan—Alan Greenspan fan. I voted against him the last two times. I think he’s one of the biggest political hacks we have in Washington.”

Likewise, when he called Bush a “loser” and a “liar” and referred to him sarcastically as “King George,” Reid only apologized for the “liar” part. Only not really, because he was referring to Bush’s sudden, about-face decision to store nuclear waste at Yucca Mountain—only 100 miles from Las Vegas and its 500,000-plus residents. “You sold out on this,” he told the president.

To be clear, I’ve disagreed with Reid on plenty of matters, particularly the ingrained liberal-hawkishness that prompts him to support (for example) enlargement and expansion of NATO’s dangerous commitments in Eastern Europe. His rubber-stamping of the PATRIOT Act and his continued support of the drug wars make him party to some of the worst calamities of our time. And I believe that for the best parts of the New Deal to survive, America needs to become more radically democratic (note the small “d”) than it’s ever been. Where Reid has had the biggest impact, however—where he has been indispensable, at times—is in the long-running war on entitlements. When he became Senate minority leader after the Republicans’ triumphant showing in the 2004 elections, he enforced a new discipline among his Democratic delegation.

For the first time since the “Republican Revolution” 10 years earlier, the Democrats began to act like a proper opposition party, taking firm stands against egregious GOP initiatives rather than searching desperately for ways to be “bipartisan.” Under the direction of his consigliere, Karl Rove, Social Security was to be the big domestic issue of Bush’s second administration, with the goal to cut the program for future retirees and reroute part of workers’ payroll tax contributions to Wall Street via personal investment accounts.

Taking a page from the Republicans’ successful opposition to Clintoncare in 1993, Reid and House minority leader Nancy Pelosi, his exact contemporary and the daughter of a New Deal House member, decided that the Democrats wouldn’t offer an alternative to Bush’s Social Security plan, or negotiate on the basis of any of Bush’s key demands. Reid set up a “war room” in the Capitol to coordinate the Democrats’ strategy and worked closely with a coalition of unions and grassroots progressive groups mobilizing against privatization—just the sort of allies who center-right Democrats tried to distance themselves from.

The strategy worked. Bush’s (and his party’s) popularity dropped steadily as he continued to campaign for Social Security “reform.” That, plus the floundering US occupation of Iraq, cost the Republicans control of Congress in 2006. (For more on Bush’s failed Social Security blitz, see my book, The People’s Pension). That led directly to Barak Obama’s election as president in 2008, and—among other things—passage of the 2010 Affordable Care Act, the most important expansion of the New Deal/Great Society state in almost 40 years.

Of course, the ACA was a deeply flawed bill, and it suffered, predictably, from a misguided decision by the Democrats to waste time negotiating with Republicans who clearly had no intention of making health care restructuring a genuine bipartisan effort. But the White House bears far more responsibility for that decision than either Reid or Pelosi, and so for the Democratic debacle in the 2010 elections. The same can be said of the decision to expose Social Security and Medicare to the misguided “reforms” of Alan Simpson and Erskine Bowles, the co-chairs of the National Commission on Fiscal Responsibility and Reform.

In raw political terms, the greatest sin of the Obama administration has been to forget the lessons that Reid taught in the years leading up to Obama’s election. In one crucial fight after another, the White House chose to negotiate directly with congressional Republican leaders, following their ground rules and leaving lawmakers from his own party on the sidelines.

The Democratic route in November 2014 appears to have brought the lessons of the earlier Reid era back into fashion, at least for a time. In January, four Democratic filibusters killed a Republican effort to gut the president’s executive orders protecting some 5 million undocumented immigrants from deportation. Reid has held his forces together on a succession of votes, reinforcing Obama’s veto threats on such matters as the recent bill to block new rules that would speed up union elections. Arguably, by following Reid’s lead and swearing off bipartisanship, Obama is salvaging the last two years of his presidency, just as Bill Clinton left office with high ratings after repeatedly squashing the Republican-controlled Congress’s efforts to pass a mammoth, upper-income tax cut. Of course, there’s always time for him to backslide.

Reid’s approach can be learned, but it helps greatly that he was born with an understanding that electoral politics are marked indelibly by the war between the haves and the have-nots. The experience of the Great Depression, and the lessons it passed on, haven’t gone away. Through Reid especially, they’ve had a deep impact on the federal politics especially of the past two decades, on matters extending from the budget to social services to employment and immigration—in other words, on everything that concerns working households.

Curiously, that claim is difficult to make for the generation of Democratic lawmakers who followed the Great Society period of the ’60s. These were the first cohort of “New Democrats,” eager to distance themselves from the more openly class-based politics of earlier decades. Perhaps the fact that they grew up in a period of unprecedented prosperity had something to do with this. It would be sad to think that only another Great Depression could produce another cohort with Reid’s consciousness. But perhaps the Great Recession will do the trick.